U.S. President Barack Obama’s sweeping plan to fight climate change is garnering kudos from many environmentalists, but leaving the coal industry fuming.

The centrepiece of the plan is setting a bold target to reduce carbon dioxide emissions from the U.S. power-generation industry 30 per cent by 2030, compared with 2005 levels. The U.S. Environmental Protection Agency dubs it the Clean Power Plan.

Annual net generation, 2001-2013

In the United States, Coal produces more megawatt hours than any other single source

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infographic

Here are five highlights from the Obama administration’s ambitious strategy released on Monday.

The plan:

EPA administrator Gina McCarthy announced the proposed new rules to curb greenhouse gas emissions, noting that the agency will accept comments on the Clean Power Plan over a 120-day period after publication in the Federal Register. “Power plants account for roughly one-third of all domestic greenhouse gas emissions in the United States. While there are limits in place for the level of arsenic, mercury, sulphur dioxide, nitrogen oxides and particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels,” according to the EPA. In a 645-page document, the EPA touts a flexible timeline for states to develop their own goals and design a program that focuses on diversifying energy sources.

A research note by consulting firm Eurasia Group said targets will differ, depending on the state. “Although the plan offers flexibility to states in terms of policies to achieve the targets, the true costs for power producers will not be known until states develop their implementation plans starting in 2016,” Eurasia Group said.

The politics:

Political legacy for the President? Mr. Obama has opted to flex his political muscle, acting under his executive authority without Congress. Legal challenges are in the works to fend off the President’s quest to bypass Congress and effectively order the EPA to enact regulations.

Senate Minority Leader Mitch McConnell of the coal-producing state of Kentucky said Mr. Obama’s strategy will lead to enormous economic pain. “Today’s announcement is a dagger in the heart of the American middle class, and to representative democracy itself,” the Republican senator said in a statement. “Already reeling from the painful effects of Obamacare, the American people are now being told they have to shoulder the burdens of the President’s latest ‘solution’ in the form of higher costs, fewer jobs and a less reliable energy grid.”

The British Columbia government issued a joint news release with California, Oregon and Washington state to praise the Obama administration. B.C. Premier Christy Clark and the governors said they are optimistic that innovations in cleaner energy to improve air quality are on the horizon.

Coal industry and states:

The coal sector warns an energy crisis is brewing, especially stemming from a proposed rule that would hinder existing coal-fired power plants. “The costly rule, seen by many as the principal tenet of President Obama’s misguided pursuit of a climate legacy, will spur devastating economic impacts including job losses and energy costs,” said the American Coalition for Clean Coal Electricity. “The proposed rule imposes stringent and potentially unattainable standards on state-based power grids that will leave millions of Americans with higher electric bills and at increased risk for rolling blackouts.”

The EPA emphasized that states have until June, 2016, to submit their energy-efficiency plans. But the Associated Press reported that even before reading details of the Clean Power Plan, coal-producing states girded for battle as Kansas, Kentucky, Virginia and West Virginia directed their environmental agencies to draft plans to factor in the costs of compliance.

Environmentalists:

The Pembina Institute said the EPA’s proposed new standards send a strong signal that the United States is serious about reducing carbon pollution, and urged Ottawa to introduce tougher rules for Canada. EcoWatch credited the Obama administration for moving aggressively to cut pollution at existing power plants. “Though the carbon rule represents a monumental moment many environmentalists have been awaiting, it remains a proposal until June, 2015, when the open period for revisions and public comment ends,” EcoWatch cautioned.

Environmentalists gave top marks to Mr. Obama for taking steps against power plants, but had reservations about the narrow scope. Food & Water Watch and the Institute for Policy Studies noted that the Intergovernmental Panel on Climate Change has outlined the negative effects of climate change. “Because this rule applies to only one segment of our economy, existing coal-fired power plants, the reduction targets fall far short of the IPCC’s goals for developed countries of economy-wide reductions of 15 to 40 per cent below 1990 emission by 2020. With these targets, U.S. economy-wide emissions would still be above 1990 levels in 2030,” the two groups said.

Global effect:

While reducing carbon dioxide emissions across the United States is being portrayed as a noble environmental cause, weaning U.S. power plants away from coal will be only a small part of what is required globally to tackle climate change. “The U.S. not burning as much coal could free up more coal potentially for the world export market,” said Andrew Leach, an economist at the University of Alberta’s School of Business. Port Metro Vancouver, the federal landlord for marine terminal operators such as Fraser Surrey Docks, is reviewing an application to allow up to eight million tonnes a year of U.S. thermal coal through the Fraser Surrey terminal. Thermal coal is used by power plants to generate electricity.

The U.S. mining and shipping sectors see an opportunity to sell to energy-thirsty customers in Asia if new export sites are built in Washington state and Oregon, but coal export proposals are running into fierce opposition from environmentalists. The long-term forecast calls for robust coal demand in Asia, according to a recent study by Shoichi Itoh, senior analyst at the Tokyo-based Institute of Energy Economics.

***

Five years ago, Canada and the United States signed the Copenhagen Accord, through the United Nations Framework Convention on Climate Change, to reduce greenhouse gas (GHG) emissions. Canada pledged to reduce them by 17 per cent, from 2005 levels, by 2020. The United States pledged a reduction “in the range of” 17 per cent, based on the same timeframe. The timing was auspicious – as a recession hit, an industrial slow-down gave many countries, including Canada and the United States, a headstart. Emissions dropped. But plenty of work remains, and Canada now calls its target a “significant challenge in light of strong economic growth.” Both Canada and the United States are on pace to fall short, although the latter is closer.

The progress

Canada’s latest update, released last fall, pegged 2011 emissions at 702 megatonnes (MT), down from 737 MT in 2005 – due almost entirely to a drop in emissions from generating electricity. Ontario “primarily” gets the credit, the federal report concedes, because it phased out coal generation. Since then, emissions in Canada have risen, and Canada is projected to churn out 734 MTs of GHGs in 2020, well above its Copenhagen target of 612 MT and only three MT below 2005 levels. The federal government notes it would have been worse – 862 MT – had Ontario, Canada and others done nothing. The United States is also on pace to fall short – its most recent Climate Action Report showed that, without “additional measures,” emissions are increasing and will not reach the Copenhagen targets, but will be further below 2005 levels than Canada’s.

What now

In Canada, the oil and gas sector is driving growth of GHGs. Its emissions are forecast by government to jump from 163 megatonnes in 2011 to 200 megatonnes in 2020, due largely to the oil sands. That is a 23 per cent hike, the most of any sector. Put in perspective, Canada’s oil and gas sector will churn out more than twice as many GHGs as the electricity sector. For the United States, electricity is the equivalent of the elephant in the room – U.S. electrical generation accounts for 32 per cent of emissions. This month’s move to rein in electrical-sector emissions will partly tackle that, although the goal is a 30 per cent reduction from 2005 levels by 2030, not 2020.

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